Data vs Analysis

Data vs. Analysis

Are you reading your data correctly?

00:06          Let’s talk about the difference between data and analysis.

00:11          Because I frequently see people looking at data in organisations,

00:15          but not necessarily doing the analysis or understanding what that data is telling them.

00:20          So let’s have a look at this typical sales performance scorecard you might see somewhere.

00:25          And what can you see immediately is sales are down 6%.

00:31          That’s terrible. That’s a disaster. What are we going to do?

00:34          But is that really telling us the story?

00:37          Or is this something else going on?

00:40          So let’s look at the historical performance.

00:44          Let’s look at the last six months.

00:46          What story does this tell us?

00:49          Well, that’s still a pretty bad story where we’re trending down,

00:53          we’ve got six data points,

00:56          and they’re all going in one direction,

00:58          they were going in the wrong direction.

01:00          So that’s not great either, is it?

01:02          Let’s have a look even broader again,

01:06          and see what that’s telling us.

01:08          And we can see the last twelve months.

01:10          Actually, we had the first six months of the year went really, really well.

01:13          And then we had the second six months of the year, go really poorly.

01:18          So I’m still concerned about our performance,

01:21          because this still looks like we started off well,

01:24          and then we lost steam and things are going poorly.

01:27          So is that telling us the picture that we’re really falling away from our performance?

01:34          Well, let’s look at the last two years in comparison.

01:39          And that suddenly tells us a very different story.

01:43          And actually, what we can see here is that our performance this year,

01:48          is exceeding the last two year’s performance.

01:52          So once we always see a downturn in June,

01:55          it’s predictable, it’s expected.

01:57          And in fact, instead of being upset that we are minus 6%,

02:01          in terms of our sales,

02:02          we should be celebrating the fact that the previous year

02:07          was minus six and a half percent and the year before that was minus 7%.

02:12          So we’re actually getting better at minimising this drop off in sales.

02:19          It turns out that our performance is fairly predictable,

02:23          and follows a natural allocation over the course of the twelve months.

02:29          So just looking at data.

02:30          And a single data point can be really, really misleading.

02:35          You’ve got to understand the context of that data,

02:38          and what it really means.

02:40          And in organisations, we see people reacting to single data points.

02:44          This month’s performance,

02:46          or last month’s performance wasn’t as good or was negative or miss targets

02:52          but we’re really bad at looking at the context behind what that data is telling us.

02:58          And the analysis, the comparative analysis that goes with it.

03:02          So next time you see a single data point in isolation,

03:05          have a little alarm bell go off and think well what’s the context behind that data?